Second thoughts on Muskrat Falls

I have recently read in your paper two lengthy articles extolling the virtues of the Muskrat project. As an original supporter of this venture, who after much study found that the risks and costs far outweigh any benefits, I felt the need to respond.

My limited research on other current hydro projects being planned reveals Muskrat Falls power to be by far the most expensive hydro power to be produced. The Belo Monte dam in Brazil (a monster project, third largest in world) is projected to cost $16 billion and will generate 11,230 megawatts (MW) of power. The Romaine project in Quebec is projected at $6.5 billion and will produce 1,550 MW. Our Muskrat Falls is now at $7 billion to $8 billion for over 800 MW. Taxpayers and other interested parties, please get your calculators out and do the math! Remember, we ratepayers/taxpayers will bear the brunt of this very expensive outlay of public money — Nova Scotians and others (if we have any left to export to New England states) will get market rates of four to five cents per kilowatt hour. We will pay anything ranging from 18 cents to 40 cents — maybe much more if we dare factor in the inevitable cost overruns.

Hydro power has invariably been touted as “clean” energy. Premier Kathy Dunderdale has said this so often (and Nalcor officials, too) that one would have to believe that it must be an absolute truth. I confess that I did believe this, too, for a long time. Independent research has shown that, over their lifetime, greenhouse gas emissions from some boreal (Northern Manitoba) and tropical (Brazil) hydro reservoirs may either be equivalent to, or greatly exceed, those from coal-burning power plants of the same generating capacity. Gotta love those myths!

The project is being sold to us as stable and reliable. Does anyone know of any submarine power cable anywhere else that has the regular passage of huge icebergs above it? The terrain that the 1,100-kilometre transmission line will pass through is high ground for much of the line — therefore subject to ice-covered wires and high winds. Do these conditions sound familiar to anyone lately?

Can you imagine trying make quick repairs to such a long, relatively inaccessible line? Weeks at best, maybe months if extensive damage happens. We had better have a great backup system in place. Significantly, Ron Penney and David Vardy pointed out in a recent letter to the editor that there is no agreement with Emera for emergency power coming to us from the mainland if the above happens. Guess we have to trust that Nalcor will cover this in future agreements with Nova Scotia. One wonders how much more power we may have to commit to get that in place.

So much has changed since the initial announcement six or seven years ago. Nova Scotia was supposed to get 20 per cent of the power — now the new agreement gives them 44 per cent to 57 per cent. The Shale Gale (development of natural gas from shale) has depressed energy prices in the States. (Remember when Nalcor talked about the great profit we could make from selling extra power on the spot market?) Quebec found that power from the Romaine Project does not qualify for the Renewable Energy Certificate adopted by 25 states, including some of the main New England states like New York. Wow, even some so-called power hungry states no longer view hydro from big dam projects as clean energy. Wonder if they neglected to tell this to our premier last year when she came back and told us all how much they desired our new clean, green energy?

Government and Nalcor have prevailed on us recently to conserve, conserve, conserve. Yet for many years, leading up to the present woes, they could have initiated many conservation steps — mandatory heat pumps for new large houses (maybe subsidies for some income groups to use this heating technology), different rates for peak usage power times, better building insulation standards, etc. — there are no shortage of conservation ideas out there for sure.

The problem with doing these wise measures means we will need less energy in the future, and this would not be in the interest of Nalcor at all once Muskrat comes online. Then they will want us to burn, baby, burn because that’s one giant bill that will need to be paid by us consumers. God help those who are already struggling with their heating bills.

One final thought: Manitoba Hydro, which has been used to give consultant advice on Muskrat Falls, recommended a higher construction standard be used when building the very long transmission line. Nalcor opted for a less costly system. Given the above thoughts about the harsh conditions of the terrain through which the power lines pass, was this a wise decision or one of necessity?

Was there a less costly option than Muskrat? Indubitably, but it would not have been a grand legacy project, though, and therein lies the rub.

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roxanne

January 26, 2014 - 15:50

I have read both the pros and cons for this project, I must say the information provided by those who do not support (or no longer support) provide much clearer rational and stronger arguement then those for it ... the unreliability of power is the strongest arguement for the pro side, that reality we have known for sometime and now at the 11 hour the province is scrabling to keep the lights on, but at what cost?

Muskrat Falls is not a hydro project at all. It is a political raison d'etre, an "instant soup" election platform, a great symbol of desperate delusion. The economic considerations of this were never primary from the beginning, but and have now become completely irrelevant. This is nothing but a poisonous crusade, a partisan fight to the death. Ours.

CORECTED COPY ---- John Smith, government and FictionOrFact keep pushing the fictional $2.2 billion advantage for MF, and say MF is thereby the least cost option as compared to any other option for the province. FACT, I recently installed a heat pump in my 33 year old, electric baseboard-heated house for $4,600 and am averaging a per day reduction in energy use of 35%. At that rate, government could install such unit in every residence on the island for $1 billion. That would reduce energy use by between 25 and 40% and would beat Muskrat Falls as the 'least cost option' to the tune of about $6 billion. We do not need "more power". The island's maximum capacity is 2,500 MW, the island's NET (FIRM) capacity is 1,958MW ---- and during the recent "peak" demand period Nalcor reported that we hit a momentary 1,720 MW ---- almost 800 MW BELOW the island's maximum, and more than 200 MW below our existing "firm"/ NET capacity ----- Nalcor just did not keep the EXISTING, INSTALLED NET CAPACITY maintained ------- why not ???

No Agreement for Emergency Power?
Amazing the amount of mis-information that is out there! Look at the agreements between Nalcor and Emera (that are posted on-line) – specifically the Interconnection Operators Agreement addresses “Operating Reserves” and “Emergency and Security Energy Transactions” so to say that there is no agreement in place to handle emergency situations is absolutely wrong.
Just because somebody else said it, that does not make it a “fact”.

Nova Scotia will have infeeds from Nfld and NewBrunswick, The new Brunswick infeed will be sufficient for the that portion of NS load, lets say 50 percent. To feed Ndld too 'in emergency, a much larger capacity infeed will be needed.As is this a temporary load, a day or two or a week, it is economic for Emera. Who will pay for this capacity in transmission? Nfld again? Nalcor didn't even proceed with the 3rd line to the Avalon, saying it was uneconomic!. And see the consequences!. Is Emera foolish eneogh to get us such emergency power? Maybe a 100 Mw for lights but not the hundred needed for heat.

Jon Smith

January 24, 2014 - 13:03

The Williams government failed in any attempts to negotiate with Quebec for any Labrador power deal and failed in any court attempts against Quebec w.r.t. Upper Churchill power. Nalcor became the hastily assembled tool to fight back. Nalcor and Muskrat power deal fell into place as an attempt to emulate Hydro Quebec. But the Harper government put Nova Scotia in the driver's seat which became the payback for the ABC campaign. Nalcor as it is evolving may never ever be any rival to HQ.
The recent attempt to procure a consultant to investigate the PUB and future of the interconnected grid is most likely aimed at nationalizing Newfoundland Power and decommissioning the PUB role in regulating power utilities in the province.
Don't expect Muskrat to be any different than Upper Churchill. We will pay through the nose and bitch and complain for the next 50 years as we did for the last 40 plus years for UC and probably initiate many more useless court challenges. And if we went into Muskrat with our eyes wide shut as at Upper Churchill, who can have any sympathy for us.

Actually MF has a nameplate capacity of 824 MW at the production site, Because of a small reservoir of water , average production in winter is about 560 MW at the site Allow for 10 percent transmission losses to st john's and 17 percent to new England, and power for sale is only about 500 mw. That all they can get paid for, is what is delivered, not what is generated. Nalcor avoids those figures and likes to use the 824 number. That is a ok number if all the sales were in Goose Bay. This project is so silly at present. One could laugh or cry, or hope for a miracle. More amd more are seeing through the scheme. The power outage inquiry will likely expose more of the pitfalls, as the project carries on. no wonder Dunderdale got out, and Kennedy before her. Now Marshall will go down with the ship. He'll restate the idea that this expenditure is not a debt, it is an asset. What is the good of an asset at great cost that produces no net benefit. It becomes a stone around our necks, but there by asses, that is donkeys. Yet he is a soft talking quiet man and should know better .Pity, pity , pity.

Is Muskrat clean energy?
Not all hydro projects are created equal. There is minimal flooding caused by the creation of the dam at Muskrat Falls – about 16 square miles. As for our neighbours in New England wanting our hydro energy… the New England Governors are proceeding with a large scale procurement for Canadian hydro because they see it as a viable option to help them meet their greenhouse gas targets. Do your homework!

Is it less Costly? And What Nova Scotia pays?
Muskrat and the Labrador link are less costly than continuing on oil and with the island isolated from the rest of North America by some $2.2 billion – and that assumes that any water that we don’t need to supply NL goes over the dam. Therefore, whatever we sell to NS is pure gravy. If we sell our surplus to the top bidder (NS or anyone else) any revenues are pure profit because the alternative is to let it go over the dam and get nothing for it. I’ll take that deal any day! Just because it is good for someone else doesn’t mean that it is bad for us. This is win-win.
As for FIN TIP’s assertion on the future of Holyrood – absolutely NO basis in fact at all!

Shouldn't they have to pay at least the same price as we have to pay for electricity? I mean, it's worth what it's worth on the market like any other commodity. Isn't it? Would they sell their resources to us for cheaper than they can produce it? LOL. Yeah right. Muskrat is the most idiotic swindle I've ever heard of in my life and no one I know agrees with it but we weren't given any choice in the matter because it was forced upon us by our genius politicians. Give me a break.

FINTIP

January 24, 2014 - 12:21

Yes, there is no doubt project metrics have deteriorated significantly since Williams first unveiled the broad strokes of his deal with EMERA a week or so before departing politics. This stems, in part, from factors not foreseen or properly weighted by NALCOR - some of which Charlie Menchions identifies in his column. But there is another disturbing implication - whether NALCOR had negligently, if not deliberately, misrepresented the costing of the two alternatives presented to the PUB. For example, in its submission to the Board in July, 2011, NALCOR stated that the thermal generating capacity of Holyrood would be decommissioned by 2020. The obviation of major capital investments that would otherwise have been required to modernize Holyrood - was presented by NALCOR as a key argument for Muskrat by increasing the Island alternative by some one billion dollars. There is growing consensus that decommissioning Holyrood is no longer in NALCOR's long-term plans - it it ever was. In an era of weather extremes, and given the risk of a iceberg scour, reliability of the interconnected grid would be in jeopardy without significant back-up generating capacity on the Island - e.g. Holyrood. Nor, as Mr. Menchions points out, is there any evidence (or likelihood) of reversing the flow on the Maritime Link in the example of the recent blackouts during which all of eastern North America experienced cold weather extremes. If, therefore, the Interconnected Option had reflected this additional billion dollar charge (and given the other variances noted by the Board), it is clear that the Isolated Option would have emerged the cheaper alternative. A final point. Human nature is such that, once having staked a position on such a controversial issue, we are loathed to change our mind. Mr. Menchions deserves credit not only for a well written column, but for having the courage to abandon his previously held view in the wake of new information. Indeed, because of Bill 29, NALCOR's exemption from disclosure laws, muzzling of the PUB, and the extremely secretive manner in which this project was presented to the public, I suspect there are a great many people who find themselves in Mr. Menchions shoes. As time goes on, and as the true magnitude of electric rate increases facing this province becomes apparent, there will be a huge shift in public opinion on the wisdom of this undertaking.

They got the Muskrat Falls project started now but they should build the transmission line large enough to also carry the upper Churchill falls power for after 2041 when the lopsided contract now in place with Quebec expires for if NFLD does not have a transmission line large enough to also carry the Upper Churchill Power after 2041 then Quebec Not NFLD Will Still collect the Lion share of the benefits from the upper churchill power

Oh my! So much mis-information – where to begin?
Capital costs? You’ve done “limited research” indeed! $7 to $8 billion for Muskrat? There is nothing behind these numbers but speculation and fear-mongering by folks that have other agendas besides informed debate. The direct capital costs of Muskrat and the Island Link haven’t changed from the sanction estimate of $6.2 billion ($3.4 B for Generation and $2.8 B for transmission). To compare Quebec’s Romaine project to Muskrat, you need to be careful of what you are comparing. Romaine’s generation cost estimate, at $6.5 billion ($4.2 million/MW), does NOT include transmission. Muskrat’s generation cost estimate is $3.4 billion ($4.1 million/MW). Muskrat is a lower cost generation project. Do your own math!

Why is it that anyone who questions your numbers is 'fear-mongering' or has 'other agendas'? Dunderdale is gone - but not the dismissive, condescending, accusatory attitude engendered within government toward anyone who dares question this project. Time and again in the AG's audit, he references public projects the costs of which have skyrocketed. And yet were are told to have faith that this mother of all public projects is somehow exempt from that reality?
The only cost that counts is the cost of delivering a kilowatt hour to our homes and businesses. The Romaine comparison doesn't include transmission because there is ample existing capacity on the Hydro Quebec grid (the depreciated capital cost of which is negligible). The cost per MW from Muskrat will be double that of Romaine (more, if Muskrat incurs significant overruns). See 'How the Polar Vortex revealed the hubris in Newfoundland's leadership' in Jan 9th edition of Globe & Mail. I had hoped that with Dunderdale's departure, the contracts for anonymous spin-doctors like John Smith would have dried up. Silly me.

nichol

January 24, 2014 - 13:24

Talk about mis-information....
Romaine transmission costs are included in the $6.5B. The length of the line will be 500km from Romaine 2.and will connect to the HQ grid at Arnaud. Generation costs of Muskrat should be lower, as there is only one dam. Romaine has multiple dams, and will produce 1550MW. I too, have changed my mind. Initially, Muskrat was supposed to be a self financing project, not requiring Government funding. Where do you think all the funding so far, has come from? And the funding for years of planning. Muskrat is the biggest lie in our history.
Not only were we lied to, but we 280,000 ratepayers in NL have been legislated to pay ALL costs of the project by Bill 61, which also removed the PUB protection from the process, and created a monopoly for Hydro. Bill 61 is a more evil piece of law than Bill 29, that is certain.
With the AG report just out, it is interesting
to note that the total in Provincial oil royalties that we have received since 2003, when the Williams/Dunderdale Government took over, is $14.52 Billion.
That money has been squandered by the Government over the past ten years. Where are the benefits of this massive fortune? We are still with double digit unemployment,
and are at the bottom of the scale in many indices. Our people have been forced to work elsewhere, in this so called 'unprecedented eceonomic boom'. It is too tragic to be a joke.

FictionOrFact

January 25, 2014 - 09:51

Maggie and Nichol: Just to be clear, these are not "my" numbers, rather they are the only numbers out there that are based on any real investigation. Everything else is based on speculation and supposition without any real analysis - let's wait for Nalcor to provide an update in a couple of months.
As for Romaine's transmission I have to disagree because the mechanism in Quebec by which transmission costs are recovered is through a transmission tarriff that Romaine will have to pay every year, forever - this information is in QC's Open Access Transmission Tariff (OATT).
I enjoy informed debate of the issues, but any real debate has to be grounded in fact and not supposition.
In any event, while the Romaine comparisions are interesting, the bottom line is that the reason NL is building Muskrat is based on a comparison to NL's alternatives for generation and it beats out the next best alternative by $2.2 billion.

jerome bennett

January 24, 2014 - 08:26

Probably the only reason i halfway agreed with the Muskrat Falls development was that we'd be a part of the Continental Grid.I just can't believe there isn't an agreement in place to get power back from N.S.if there is trouble in Labador.

What is the advantage of being part of the continental grid when we have to pay them to buy our resource? Selling a product for a dollar that costs five dollars to produce is a recipe for bankruptcy. I can't understand why anyone would willingly do that.

Jon

January 24, 2014 - 08:06

Do these other projects have the transmission component that the Muskrat Falls project has? Correct me if I am wrong, but it is my understanding that a large percentage of the total cost of this project is the transmission. So saying $7B for 800 MW compared to $16B for 11.2 GW for Romaine is not a fair comparision.

You are wrong. It's that simple Jon. Transmission will only cost 1-2 Billion and NS is paying for part of that so it doesn't enter into the cost. By the way any project has a transmission cost unless it is build on top of the user.

Maurice E. Adams

January 24, 2014 - 07:41

Just installed (Dec. 14, 2013) a mini-split heat pump in my 33 year old home (no insulation upgrade since then). During my first 28 day period (which included the very cold period), my energy use went down an average of 7.3% per day. Since then (over the last 10 day period) it has gone down an average of 36% per day. Not good news for Nalcor, or for ratepayers fully reliant on baseboard heating (who are about to be milked by Nalcor)

Good point mate, I just moved into my ICF home with 2 stage heat pump and Icynene attic insulation, Decembers electric bill (not just heat) everything. Less than $200. Base board heaters should have been banned a decade ago, as well as useless batt insulation.
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